Abstract
Prior studies show that taxes matter for the residential locations of high-income earners. But states raise a significant share of revenue from nonresidents. Using variation in state tax rates, we provide causal evidence on the effect of the net-of-tax rate on the location of labor supply for professional golfers. State taxes induce high-income earners to shift employment to low-tax states without a residence change. The elasticity of working in a state is 0.34 and, consistent with the superstar phenomenon, increases with earnings. Our results suggest a novel margin of mobility responses for top earners: the spatial relocation of labor supply by nonresidents.
Original language | English |
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Pages (from-to) | 447-481 |
Number of pages | 35 |
Journal | American Economic Journal: Economic Policy |
Volume | 16 |
Issue number | 1 |
DOIs | |
State | Published - 2024 |
Bibliographical note
Publisher Copyright:© 2024, American Economic Association. All rights reserved.
ASJC Scopus subject areas
- General Economics, Econometrics and Finance